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Bonus rates are cut by Friends and ScotProv

Friends Provident and Scot tish Provident have both cut bonus rates, bla ming poor stockmarket performance and low interest rates for the reductions.

FriendsProv has cut most reversionary bonuses on with-profits policies by 0.25 per cent.

Scottish Provident has cut its reversionary bonus on with-profits policies from 2.5 per cent to 2 per cent on the sum assured and from 3.75 per cent to 3 per cent on previously accumulated bonus.

Both life offices have also reduced terminal bonuses.

For example, Friends Provident&#39s terminal bonus, which it pays only on previously accumulated bon uses, on with-profits end owment life policies has fallen from 195 per cent to 185 per cent.

The maturity payout from a Friends&#39 25-year endowment policy drops by 9 per cent from £102,341 to £93,144, based on a male aged 30 paying £50 a month.

ScotProv has reduced terminal bonuses on most contracts.

On a 10-year policy, the terminal bonus falls from 13 last per cent year to 12 per cent and on a 25-year policy from 85 per cent to 75 per cent.

The payout on a Scot Prov 25-year endowment policy falls by 6 per cent from £85,120 to £79,893, based on a male aged 30 paying a premium of £50 a month.

Friends Provident spo ke sman Jim Murdoch says: “Despite falling stockmarkets in 2000, real returns to policy holders remain high.”

ScotProv group managing director David Woods says: “2000 was in general a poor year for investment markets and the volatility in the world stockmarkets continued.

“It is this background that has driven the overall lower levels in this year&#39s bonus rates.”

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